GameStop is endeavoring to securitize $2 billion through the sale of convertible bonds.
GameStop, the renowned video game retailer, has ventured into the realm of cryptocurrency. The company's foray into Bitcoin was announced in a series of moves over the past few months.
On March 25, GameStop updated its investment policy to include Bitcoin as a reserve asset. This decision was followed by a unanimous approval from the company's board. However, the execution of this strategy has been a topic of discussion, with many market observers feeling that GameStop could have invested a significant sum at a Bitcoin price under $75,000 in April.
The first Bitcoin purchase by GameStop was announced on May 28, when the company acquired 4,710 BTC. The exact date and price of this purchase are still unclear. The funds for this purchase were raised from the issuance of convertible notes, with GameStop planning to raise an additional $1.75 billion through this method, with an option to purchase an additional $250 million.
GameStop's plans to use these funds, in part, to purchase more Bitcoin. If the company succeeds in raising $2 billion through the issuance of convertible bonds, it would theoretically have almost $8 billion available for the purchase of more Bitcoin. This could potentially make the video game retailer the corporation with the second-largest Bitcoin reserve, with around 80,000 BTC.
However, GameStop's stock has been struggling in recent weeks. The GME stock price dropped by more than 15% in response to the press release announcing the issuance of convertible bonds. Bitcoin analyst Thomas Frerichs humorously commented on this, saying that GameStop's CEO is copying the strategy of MicroStrategy or Michael Saylor, but without actually buying Bitcoin.
It is worth noting that GameStop's CEO, Ryan Cohen, reposted a tweet stating that the company had messed up its entry into Bitcoin. The company's digital asset strategy updates, likely disclosed during quarterly reports, and driven by investor interest and market conditions, could lead to additional Bitcoin acquisitions. However, volatility in Bitcoin prices and regulatory factors remain significant risks influencing such acquisitions.
In comparison, Strategy (formerly MicroStrategy) plans to purchase Bitcoin for $2.5 billion. Unlike GameStop's recent convertible bond issuance, this one does not explicitly mention Bitcoin.
The author of this article, Tristan, is the editor-in-chief at Blocktrainer.de and has a background in economics and journalism.
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